Required reading: A startup founder explains why his company failed while the competitor succeeded

schwinn classic

“Focus on what really matters: making users happy with your product as quickly as you can, and helping them as much as you can after that.  If you do those better than anyone else out there you’ll win.” (Marc Hedlund)

If you are a web developer, an entrepreneur, someone with a startup idea, a marketer or someone who works in IT, please read Marc Hedlund’s blog post, “Why Wesabe Lost to Mint.”

Marc was “chief product officer” and co-founder of the “2.0″ personal finance web service that, in many ways, was superior to Mint, a similar service that started a year later. But Wesabe failed and Mint was acquired by Intuit for $170 million. Why?

Marc sets the record straight on some mis-perceptions of what took place, but then provides some advice that probably needs to be read-aloud each morning by anyone who is in a business that serves “users” (meaning, of course, every business, non-profit, etc.).

For me, the two key take-aways are these:

1. Make users happy with your product as quickly as you can and help them as much as you can after that.
2. Don’t attempt to make them change their behavior.

I need to remind myself of this every day as every failure I’ve experienced or witnessed can be linked to the hubris someone (and I include myself) must possess to believe they can succeed if they don’t embrace these two bits of wisdom.

Here’s a sample of Marc’s post, but please read it all:

I am, of course, enormously sad that Wesabe lost and the company closed. I don’t agree with those who say you should learn from your successes and mostly ignore your failures; nor do I agree with those who obsess over failures for years after (as I have done in the past). I’m hoping that by writing this all out I can offload it from my head and hopefully help inform other people who try to start companies in the future.

You’ll hear a lot about why company A won and company B lost in any market, and in my experience, a lot of the theories thrown about – even or especially by the participants — are utter crap. A domain name doesn’t win you a market; launching second or fifth or tenth doesn’t lose you a market. You can’t blame your competitors or your board or the lack of or excess of investment.  Focus on what really matters: making users happy with your product as quickly as you can, and helping them as much as you can after that.  If you do those better than anyone else out there you’ll win.

I think in this case, Mint totally won at the first (making users happy quickly), and we both totally failed at the second (actually helping people).  No one, in my view, solved the financial problems of consumers. No one even got close. Yes, both products helped some people — ours mostly through a supportive community and theirs mostly through giving people a rough picture of where their money has gone. But when we analyzed the benefits we saw for our users, and when Mint boasted about the benefits they saw for their users, the debt reduction and savings increase numbers directly matched the national averages.  Because our products existed during a deep financial crisis, consumers everywhere cut back, saved more, and tried to reduce their debt. Neither product had any significant impact beyond what the overall economy led people to do anyways.

So, yeah. Changing people’s behavior is really hard. No one in this market succeeded at doing so — there is no Google nor Amazon of personal finance. Can you succeed where we failed? Please do — the problems are absolutely huge and the help consumers have is absolutely abysmal.

Learn from the above and go help people (after making them immediately happy, first).

About Rex Hammock

Founder/ceo of Hammock Inc., the customer media and content company based in Nashville, Tenn. Creator of and head-helper at SmallBusiness.com.
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